>> paul: not guilty: that's the verdict for two former bear stearns hedge fund managers, in the first major criminal case related to the mortgage meltdown. a federal jury finds ralph cioffi and matthew tannin did not lie to investors. >> you're given very few moments in history to make this kind of a difference, and we're trying to do that, and i think this is important. >> susie: senate banking committee chairman chris dodd unveils his plan for a sweeping overhaul on the nation's financial rule book.

>> paul: european regulators throw a wrench into oracle's plans to buy sun microsytems, but u.s. regulators say they're still behind the $7.5 billion deal. >> susie: then, monsanto sows the seeds of growth, reaching what the agribusiness calls an "inflection point." we'll tell you what that means, and how the news grew the stock price by 5%. >> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is "nightly business report" for tuesday, november 10. "nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you. thank you.

captioning sponsored by wpbt >> susie: good evening, everyone. two high-profile wall street executives accused of fraud are free tonight. a jury acquitted matthew tannin and ralph cioffi of charges that they lied about the health of two hedge funds they managed at the former bear stearns company. the funds were he live invested in risky mortgage backed securities. the trial of tannin and cioffi was closely watched, i was the first major case tied to the sub prime mortgage crisis. prosecutors relied on e-mail messages between the two men to show they knew the funds were going to collapse. the fallout led to the demize of bear stearns and its rescue emergencyer with j. p. morgan. so what's the takeaway message from this verdict? that's what i asked professor jack coffey. he's an expert in securities law

at columbia university. >> i'm afraid this was a complete rebuff to the prosecution. they didn't find the e-mail evidence sufficiently convincing. normally a white collar jury is out six, seven, eight, nine days before they decide. but within one day of starting their deliberations they came in with an acquittal. that to me means they didn't find the e-mail evidence to be sufficiently convincing, they needed to have a witness tell them what was going on, and the defendants succeeded in providing at least colorful interpretations for what some of these e-mails really meant. >> susie: jack, this was a complicated case with a lot of jar gone. do you think the jury understood the issues? >> it's quite possible the jury understood that there wasn't enough evidence here to find guilt beyond a reasonable doubt. they may have been confused about some of the aspects of this case, but they could have seen that there were multiple explanations for these e-mails. they weren't as self-explanatory as the prosecution hoped.

and the prosecution did not have a strong corroborating witness who explained that this was a conspiracy. i was there, i saw it and i knew it. >> susie: do you think that prosecutors going forward are going to rethink bringing other cases? what is the impact of this decision? >> i think prosecutors both in this case and in similar cases are going to have to conduct a postmortem and decide what was the weakness in this case. this is not about the substantive law. this is about the strength of the evidence. they may have placed overly optimistic predictions on what a jury would conclude, seeing the e-mail evidence in this case. they may need to go back to more old fashioned prosecution in which there is at least one or two corroborating witnesss. so i think the government has to reevaluate how strong this evidence is before they bring other cases that involve somewhat equivocal evidence based on e-mails that may be explained away when the defense presents its side of the story. >> susie: what impact to you think this decision is going

to have on this insider trading case that there's been so much publicity about? >> i don't think it's going to have any impact at tall on galyan. there is a day and night difference in the quality and character of the evidence between the bear stearns case and the galyan case. in the galyan case we are wiretaps, we have witnesss who were there and were participants in the conspiracy and will explain that the other deafs were their co-conspirators, that is the classic white collar case, it's very strong and hearing the defendants on tape telling people that if this evidence comes out we'll all go to jail, that's the kind of stuff the juries find easy to convict based upon. >> susie: are there any other cases pending that could be in jeopardy? >> well, we don't know what cases are pending because the government never tells you until they indict. but it has been rumored in the press that there have been cases planned against aig, other financial banks, there are possibilities of other

real estate subprime mortgage fraud cases. all of this will have to be reevaluated in terms of whether the government has the strength of evidence necessary to ensure convictions. >> susie: there's a big disconnect between main street america and waz during this financial crisis. a lot of people who lost money in the bear stearns case were institutions and high net worth individuals. but yet there is this sense that once again a big financial firm, or individuals who work at big financial firms got off. what would you say to the american public? >> i understand that the american public is going to be disturbed and surprised by this. but this is how our system of criminal justice has always been structured. it gives the balance of advantage to the defendant. unless the prosecution can show that beyond a reasonable doubt a crime was committed, the jury is instructed to acquit, and i think this jury basically observed the instructions they were given by the court, that they had a reasonable doubt, they saw it right away and therefore the

balance of advantage dictated that the defendant be acquitted. >> susie: jack, thank you so much for your time. very interesting analysis. >> thank you. >> paul: after small opening losses on profit-taking from yesterday's sharp rally, wall street bounced back with a 33- point gain an hour into trading, with the nasdaq up 6 points. the upturn failed to gain traction after the dollar strengthened, causing commodity stocks to weaken. switched to dow to a higher close. it gained 20.03 to 10,246.97. but the nasdaq come pos i lost 2.98 ending at 2151.08. standard and poors 500 down .07 at 1,093.01. in the bond market the 10-year note rose to 101. putting the yield at 3.48%.

>> susie: senate banking committee chairman chris dodd today unveiled a sweeping proposal to overhaul the financial regulatory system. coming in at more than 1,100 pages, the proposal aims to put an end to institutions that are too big to fail. it would rewrite the rule books for how banks and other financial institutions are regulated. and it's also a bold gamble for the man who came up with the plan. >> reporter: this is not a time for timidity. senator dodd's proposal would take away the regulatory powers of the federal reserve and the fdic, creating a powerful new regulator to oversee financial institutions. dodd doesn't want the fed loaded up with more responsibilities. >> it's not designed to basically punish the federal reserve at all, but rather to

enhance their role and their independence. i feel very strongly about the central ingredient of the fed's strength, and that is its independence. >> reporter: dodd's proposal has several key points: a new financial stability agency to handle systemic risks and possibly require big firms to divest holdings; a consumer financial protection agency; a way for the f.d.i.c. to unwind failing financial firms; and a limit on the fed's ability to lend. dodd's approach differs from the house and administration, which would give the fed more powers. dodd calls his approach bold. >> i could have tried to graph something that was sort of already a compromise of ideas in a sense here, but i think you make a huge mistake by doing it. you're given very few moments in history to make this kind of a difference, and we're trying to do that, and i think this is important.>> reporter: the propl has a long way to go. fellow democrat and banking committee member senator mark warner hopes a bipartisan solution can be crafted. >> this is an area where the unintended consequences can be

dramatic, and that's why we need all of us rowing in the same direction. >> reporter: analysts say a powerful new regulator and consumer protection agency could make it hard for banks to be profitable. concept capital analyst jaret seiberg expects the proposal to be scaled back over time. >> to us, the big deciding point will come in the first quarter. either they are going to go forward with a comprehensive bill, or they are going to narrow the approach. and we think, at this point, we're going to get a narrower bill, and that would certainly be a positive for financial firms. >> reporter: it could also be a positive reelection tool for senator chris dodd. he faces a nasty fight in connecticut, and analysts say he's eager to show he can be tough with the financial industry. stephanie dhue, "nightly business report," washington. >> paul: in creating a single banking regulator, senator dodd's bill goes much further than the obama administration proposed. if passed, it would be the largest government shakeup since the creation of the department of homeland security. is it a good idea?

darren gersh put that question to treasury assistant secretary michael barr, a key player in the obama administration's reform efforts. >> i think the key issue is not who's up or who's down or what the regulatory boxes are in reform. the key principles that we have to have are new clear rules of the road for financial firms, tougher forms of supervision, protection of consumers and investors, going after problems with mornls -- mortgages and overdrafts and credit cards that are still hard on american consumers today and ending this perception of too big to fail. those are the key measures we'll be judging any reform on. >> but there's an important point which is that senator dodd doesn't seem to have a great deal of confidence in the federal reserve as a regular later so, he wants to put the regulatory function in a different agency and have the fed do less. do you think he's wrong? >> i think there was a regulatory failure all around in the system.

our financial regulatory system fundamentally failed the american people. we need fundamental change in our system of financial regulation. there are different ways of achieving that. i think the key thing is that we focus on our clear principles. we need clear rules of the road going forward to protect consumers. we need to have tougher rules on financial firms in wall street, and we've got to end this perception of too big to fail. those are really the core prince peoples that i think the american people will be looking to us for. >> reporter: some of the people i've talked to who studied this are looking at that latter point that you made and say the regulatory reforms give regulators a great deal of flexibility to respond to almost any crisis. while that may be good, it doesn't create the kind of certainty that says we're not going to bail out these firms under any conditions, so it leaves a kind of open, and that sends the wrong signal. do they have a upon? >> i don't think. so i think if you look at the legislation that's being considered in the house and senate, this is tough legislation, higher

capital standards for the largest firms, so there are bigger buffers in the system in case they fail. fundamentally changing the rules for the largest firms with respect to activities they do. gives the ability of the regulator to bust up big firms if it's a dangerous to the system. and imposes serious costs on creditors, investors, in the event of those term failures. there's tough legislation on that score. i think it really does end the perception of too big to fail. >> reporter: by giving regulators the ability to go in and resolve big first and step in when they see a risk, are you in a way creating a permanent tarp? >> absolutely not. nothing could be further from the truth. we have tough new rules on these institutions. and the point of the special resolution regime in all these bills, the point of dissolving these firms is to get rid of them. not to keep them alive. we need to wind them down in a way that doesn't blow up the system, that doesn't harm american businesses, that doesn't harm american

consumers. that doesn't ruin our ability to finance small businesses. we had this problem last fall where the government didn't have the too manys to wind down these firms, and we're paying a price for that every day. >> reporter: all right, michael barr, thank you for your time. >> thanks very much. >> susie: fed ex is expecting its busiest day of the year to be its busiest day ever. it predicts it will ship 13 million packages on december 14, almost twice the volume of an average day. that would also be a daily record, and more than 8% higher than last year's peak day. during the entire week of

december 14, fed ex plans to make more than 50 million shipments. the big jump is thanks to a spike in online holiday sales. >> susie: also, fed ex has cleared a hurdle with the tax man. the i.r.s. said the company does not owe taxes or penalties from using independent contractors in its fed ex ground unit from 2004 through 2006. paul? >> paul: susie, despite that decision, fed ex is still fighting lawsuits over just how it classifies its delivery drivers. now let's see what was driving wall street as we take a look at our stocks in the news tonight.

>> paul: and those are the stocks in the news tonight. susie? >> susie: european regulators moved today to block the $7 billion merger of oracle and sun microsystems. u.s. regulators had already approved the deal, and today's action threatens to raise tensions between the u.s. and the e.u. and as scott gurvey reports, with sun's balance sheet bleeding millions every month, there's a lot at stake. >> reporter: what the europeans have done is blocked sun's hail mary pass. once the darling of the internet age, sun has fallen on hard times, and its acquisition by oracle is seen as a last-ditch move to insure its major technologies survive. standard and poor's tom smith also notes there are a lot of jobs at stake. >> if it were to dissolve altogether, worst-case scenario, for sun, that's almost 30,000 jobs that die. >> reporter: it is unusual but

not unheard of for the europeans to object to a deal already approved by the u.s. justice department. the e.u. famously torpedoed a proposed merger between g.e. and honeywell in 2001. anti-trust attorney david turetsky says in today's case, the u.s. justice department took some unusual action of its own. >> the department of justice, in a move that wouldn't really be described as typical, issued a statement after the european commission issued the statement of objections and explained exactly how it analyzed the market, and that it saw things differently. >> reporter: one of oracle's biggest competitors in the application software market is germany's s.a.p., and some critics today accused the europeans of protectionism. but in fact, in buying sun, oracle has its eye not on s.a.p., but on i.b.m.. that's because i.b.m. offers customers both an extensive line of server and mainframe hardware and database and application software products.

oracle has been on a buying spree in a drive to become a one-stop shop like i.b.m. sun is its first major hardware purchase. >> throughout the i.t. industry now, there seems to be interest in a strategic model that includes software, hardware, and services and bundling-- the whole thing together, to provide big enterprise clients with a total solution. so oracle is a player that's comprehensive in its software operations, but has very little in hardware, so this would give them a toe-hold on a strategy toward being more of a total solutions company. >> reporter: oracle today said the european commission has a "profound misunderstanding" of the market. the company will present additional material to the commission. but while the europeans continue their investigation, sun is losing customers and $100 million a month. scott gurvey, "nightly business report," new york. >> paul: tomorrow street critique guest hilary kramer on preparing your portfolio for wall street's next shoe to drop.

>> susie: what's in capital one's wallet? a lot of insolvent customers, apparently. capital one said today its credit card chargeoffs keep on rising because of weakness in the housing and job markets. in the third quarter, capital one said almost 10% of its credit card loans weren't paid off. the issuer of master card and visa cards expects the level of bad loans to stay high through next year. >> paul: the obama administration's foreclosure relief plan is picking up steam. a new report shows one in five eligible homeowners is now getting help. as of the end of last month, more than 650,000 borrowers had signed up for loan modifications with the making home affordable program. that's enough people to fill the new dallas cowboys stadium. eight times.

>> susie: tonight's commentator says his friends to the north could be hungry for u.s. banks. he's howard green, anchor of canada's business news network. >> don't be surprised if your neighborhood bank is being given the once-over by a canadian bank. after surviving the crisis with zero cash from government, canada's big banks are sitting pretty on enormous capital

cushions. their tier one capital ratios, which regulators watch like hawks, are at double digits. banks here have always kept them high, and usually above the required level of 7%. but double digits? royal bank of canadas now sits at 12.9%. so the question is, what will they do with all that capital? shareholders here love their dividends, and not one of the big five banks trimmed its payout during the crisis. so speculation continues about what these goliaths might want to buy in the u.s. not so fast, though. forays by canadian banks into the american market have not gone well. as a result, they're a bit scared to make a move. canada's royal bank, also known as r.b.c., has banks in the southeast, but its business there has been a headache and not very profitable. bank of montreal, known as b.m.o., owns harris bank in the chicago area. again, harris has not lit up the charts. toronto-dominion, or t.d. bank, bought new jersey's commerce

bank two years ago for what now looks like a king's ransom of $8.5 billion. but don't let these grim facts distract you from monitoring canadian banks. remember: they're not allowed to merge at home. so all that bulging capital in their pockets might start burning a hole before long, leading to some cross-border bank shopping in the u.s. of a. that's maybe not good for canadian shareholders, but it would better for you americans, because you'd have stronger banks in the 'hood. >> paul: recapping today's market action, a split decision on wall street. the dow gains 20 points, but the nasdaq loses nearly 3 points. to learn more about the stories in tonight's broadcast, to watch our streaming video and to take part in our daily blog, go to "nightly business report" on pbs.org. you can also email us at nbr@pbs.org. >> susie: that's nightly business report for tuesday,

november 10. i'm susie gharib. good night, everyone, and good night to you, paul. >> paul: good night, susie. i'm paul kangas, wishing all of you the best of good buys. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org